Gov. Cuomo Aims for Marijuana Legalization, Among Other Initiatives

By:
Chris Gaetano
Published Date:
Jan 9, 2020
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Governor Andrew Cuomo, during his State of the State address, said that, among other priorities, he aims to make adult use of recreational marijuana legal, ending decades of prohibition.

"For decades, communities of color were disproportionately affected by the unequal enforcement of marijuana laws, he said. "Last year we righted that injustice when we decriminalized possession."

The proposal limits the sale of cannabis products to adults 21 and over and establishes certain quality and safety controls, including oversight over the packaging, labeling, advertising and testing of all cannabis products. The governor intends for these efforts to be made in coordination with neighboring states Connecticut, New Jersey and Pennsylvania.

Additionally, Cuomo  proposed creating what he called the Global Cannabis and Hemp Center for Science, Research, and Education at the State University of New York (SUNY), saying that New York must lead the way on this issue.   

While there had been a similar push for legalization last year, the bill ultimately stalled in the Legislature due in part to divisions in how the state would set up taxation and rules for the new industry. Responding to these concerns, the governor's plan is meant to center on social equity, particularly for those disproportionately affected by the drug war. Axel Bernabe, assistant counsel to the governor for health, outlined during the Foundation for Accounting Education's recent Cannabis Conference how this might take shape. 

The legislation Bernabe said he was helping craft at the time would limit the number of growers and dispensaries, as well as introduce a three-tier system, similar to the one in Washington state, so that growers and wholesalers cannot own dispensaries in order to prevent vertical integration and retain local community control. He also said that the program takes a decided interest in providing incubation for fledgling businesses in order to train people on how best to deploy their capital. 

He added that the state is also looking to use outside investors to help local businesses by instituting a fund that will provide low-to-no-interest loans to social equity licensees. These "multistate operators with deeper pockets" will contribute to this fund as a condition for participating in New York's adult-use and medical market. 

Tax Provisions

The governor also outlined a number of tax-related proposals he wants to implement this year. Because "small businesses need extra help," Cuomo proposed cutting their tax rate from 6.5 percent to 4 percent to allow for expansion and growth. He also proposed lowering individual income taxes for those making up to $150,000 a year to 6.9 percent, and lowering taxes for those making up to $300,000 to 6.4 percent. His plan would also expand the Empire Child Care tax credit to provide an average benefit of $400 per family with children under four years old. 

The governor also stressed continuing efforts to fight the $10,000 cap on state and local tax deductions, which had been unlimited before the passage of the federal Tax Cuts and Jobs Act. Cuomo had previously characterized this cap as "all-out attack on New York's economic future" and tantamount to "economic civil war." Since the cap's passage, New York and other states disproportionately affected  filed suit against the federal government trying to abolish it, but the case was recently dismissed, the judge holding that the cap does not get in the way of states' authority to tax within their own limit, and therefore it does not represent the federal government intruding into state government matters. Despite this loss, the governor said he intends to continue fighting the cap, though was not specific on how. 

"We must also be diligent in our efforts to reverse the Federal Government's unjust, unconstitutional taxation of our state through the SALT assault,'he said. "We passed the first property tax cap in history and they, in one swoop, raised our taxes to send more money to their politically favored states. Our Federal representatives must deliver for us. The US Senate must overturn SALT this year."

Business Provisions

Cuomo's plan also includes a number of more general provisions affecting businesses. One is a plan to end what's colloquially called the "pink tax," essentially gender-based price differences in products that are functionally the same, such as razors and shampoos. To this end, the governor plans to advance legislation to prohibit gender-based pricing discrimination for substantially similar or like-kind goods and services. It will require certain service providers to post price lists for standard services; businesses that violate the law would be subject to civil penalties.

"Let's end the 'pink tax.' Pink or blue, the price should be the same," said Cuomo. 

Another proposal, building from the previous paid family leave law, is a comprehensive paid sick leave law that would mandate that small businesses grant employees five days of paid sick leave, and that large businesses grant seven days. 

Cuomo also took aim at gig economy companies such as Uber and Task Rabbit with a proposal that would require workers for such platforms to receive basic employee protections and have access to governmental safety nets. 

The governor would also strengthen anti-wage theft laws. Noting that judgments on such cases are often difficult to collect, the proposed new law would allow judges to place a lien against employers that lose these cases in order to encourage them to make their employee whole.

Cuomo also aims to make it easier to apply for minority and women-owned business enterprise (MWBE) status by developing a statewide Integrated MWBE Application Portal. This will allow business owners to apply for any and all MWBE Certification programs in New York using one website and one common application. The portal will also provide applicants with direct assistance from program staff in order to make the process of completing the application as accessible as possible. Further, the proposal would also increase MWBE certifications from three to five years; expand the Division of Minority and Women's Business Development's internal resources; work with external stakeholders to streamline and reduce the time associated with the application review process; and release updated information and guidance that explains the certification process and providing increased technical assistance to applicants as they navigate the certification process.

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